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The Government must ensure there is enough funding to rebuild the country’s water supply network and will miss its target to cut the national drugs expenditure, the EU said.

In a post-bailout report on Ireland, the EU said the Government will not reach its target to cut the amount the HSE spends on patented medicines. It urged the Government to start a debate —ahead of the election — about responsible public spending in the years to come.

The report — written by some of the same EU officials who supervised the bailout — notes that the status of Irish Water in terms of Government accounting will be determined in October at the latest, when Eurostat, the EU statistics office, decides on whether to reclassify the company as an off-balance sheet utility in respect of national debt.

The Government has repeatedly said it is confident that Eurostat will declare that Irish Water has raised enough money from bills and therefore will classify it as an off-balance-sheet utility, enabling it to more easily raise debt on corporate debt markets and invest in water and sewerage plants and pipes.
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“But it unclear what level of compliance will be” and “it will be important to ensure the company has sufficient funding much-needed infrastructure investment”, according to the EU report.

The report says the Government will miss its target to save €40m from the on-patent medicines budget this year because of a breakdown of a planned review with the Irish Pharmaceutical Healthcare Association.

However, “good progress” has been achieved in encouraging the HSE to use off-patent drugs, the report said.